New Year's Eve got off to an unexpected bang in the Thai capital, Bangkok,
when a series of bombs detonated across town, killing at least three people and
injuring dozens, including several foreign tourists. The explosionsno one so
far has claimed responsibilitycapped off a turbulent year for the Southeast
Asian nation. In September, the country's democratically elected Prime
Minister Thaksin Shinawatra was ousted by a military junta. Then, on Dec. 19,
Thailand's stock exchange suffered its worst-ever one-day drop after the nation's
monetary czars instituted controversial capital controls. Meanwhile, an
insurgent movement in the country's largely Muslim south has ratcheted up its bloody
campaign, setting off near daily bombings in Thailand's three southernmost
provinces. "[2006] was the year of the greatest social and political divisions in
a generation," says Bangkok-based economist Chris Baker.

The New Year's Eve bombings in Bangkok erupted in two waves. The first series
of blasts exploded around 6:30 in the evening, just as revelers were
beginning to crowd the streets of this party-loving town. The six targets included a
shopping mall, a supermarket and a bus stop at Victory Monument, one of
Bangkok's busiest gathering places. "At first, I thought the noise was a flat tire,"
says waiter Thanapon Prukthara, whose outdoor restaurant is located less than
20 yards from the Victory Monument detonation site. "But then I heard all this
screaming and saw people lying on the ground, so I rushed to help the
wounded."

Three hours later, forensic police sifted through the Victory Monument
bus-stop wreckage for possible bomb components, collecting and photographing a
handful of nails, a metal wristwatch band and twisted chunks of metal. After
watching the police comb for evidence, German tourist Irina Martin said she was
heading back to her hotel instead of going to Bangkok's famous New Year's
countdown at the Central World shopping mall complex, as she had originally planned.
"I heard rumors from other people that there might be more explosions at
midnight," said the kindergarten teacher from Hamburg. "It's not worth going, just
for a party."

The Thai authorities must have agreed. They quickly canceled the Central
World festivities and urged the thousands of people already gathered for the
countdown to go home. Many dispersed, but plenty of celebrants were still milling
around when a second wave of bombs detonated around midnight. Two explosions
erupted near Central World, one at a flyover and another at a seafood restaurant
frequented by tourists. Several foreigners were injured in the midnight
attacks. Firework blasts added to the general chaos, with initial reports of
further bombs proving instead to be New Year's Eve festivities.

On New Year's Day, Bangkok was swirling with rumors about the possible
masterminds behind the crude but deadly attacks. Initial suspicion centered on
Muslim insurgents, who have terrorized Thailand's south with unrelenting small
explosions that have claimed nearly 2,000 lives over the past three years. But the
insurgents, some of whom are fighting for a separatist homeland for the
country's minority Muslims, have never brought their bombing campaign out of
Thailand's south. At a press conference on Monday afternoon, interim Prime Minister
Surayud Chulanont specifically discounted speculation that the terror attacks
were planned by Muslim extremists, instead linking the bombs to "people who
lost power."

Surayud did not identify any particular groupnor was any evidence
givenbut the implication appeared to rest on forces tied to ousted Prime Minister
Thaksin. Although less popular among the urban and middle-class electorate,
Thaksin swept into office with a record-high vote, largely thanks to support from
the country's rural north. Since the September coup, more than a dozen public
schools in Thailand's northeast have been torched; the military junta has used
such acts of violence, which they link to Thaksin supporters, as justification
for keeping parts of the nation under martial law. Thaksin is currently in
exile in China, as the interim government investigates whether corruption
charges can be brought against the billionaire ex-premier. On Monday, through his
lawyer, Thaksin denied any connection to the New Year's Eve attacks.

Regardless of who planted the bombs, the violence has shaken a country that
had been trying to mend its international reputation following the military
coup. Thailand remains a regional manufacturing hub, but competition from China,
India and even upstart Vietnam is threatening profits. Complicating matters
are efforts by the military-installed government to reform the finance sector in
ways that may penalize the very foreign companies needed to keep investment
flowing into Thailand. Proposed amendments to the Foreign Business Act, for
example, could force thousands of foreign firms to sell shares to Thai locals if
they wish to continue operating in Thailand. "There is a lot of confusion
about what exactly is happening in Thailand," says Sukit Udomsirikul, assistant
managing director of Siam City Securities in Bangkok. "Such uncertainty
negatively impacts business sentiment." A mysterious bombing campaign is sure to
rattle confidence further. After such a tense and tumultuous 2006, Thais can only
hope that the new year restores some measure of stability.